EN BANC

[G.R. No. 46631. November 16, 1939.]

IDONAH SLADE PERKINS , petitioner, vs . ARSENIO P. DIZON, Judge of

First Instance of Manila, EUCENE ARTHUR PERKINS, and BENGUET
CONSOLIDATED MINING COMPANY , respondents.

Alva J. Hill; for petitioner.

Ross, Lawrence, Selph & Carrascoso; for respondent Judge and Benguet
Consolidated Mining Company.
DeWitt, Perkins & Ponce Enrile; for respondent Perkins.

SYLLABUS

1. SERVICE BY PUBLICATION; NON-RESIDENT DEFENDANT. — Section 398

of the Code of Civil Procedure provides that when a nonresident defendant is sued in
the Philippine courts and it appears, by the complaint or by a davits, that the action
relates to real or personal property within the Philippines in which said defendant has or
claims a lien or interest, actual or contingent, or in which the relief demanded consists,
wholly or in part, in excluding such person from any interest therein, service of
summons may be made by publication.
2. ID.; ID. — The meaning of the provision of section 398 of the Code of Civil
Procedure has been fully explained in El Banco Español Filipino vs. Palanca (37 Phil.,
921), and the rules laid down therein are reiterated.
3. ID; ID.; ACTION "QUASI IN REM"; CASE AT BAR. — In the instant case, there
can be no question that the action brought by E. A. P. in his amended complaint against
the petitioner, I. S. P., seeks to exclude her from any interest in a property located in the
Philippines. That property consists in certain shares of stock of the Benguet
Consolidated Mining Company, a sociedad anonima, organized in the Philippines under
the provisions of the Spanish Code of Commerce, with its principal o ce in the City of
Manila and which conducts its mining activities therein. The situs of the shares is in the
jurisdiction where the corporation is created, whether the certi cates evidencing the
ownership of those shares are within or without that jurisdiction. (Fletcher Cyclopedia
Corporations, Permanent ed., vol. 11, p. 95.) Under these circumstances, Held: That the
action thus brought is quasi in rem, for, while the judgment that may be rendered
therein is not strictly a judgment in rem, "it xes and settles the title to the property in
controversy and to that extent partakes of the nature of the judgment in rem." (50 C. J.,
503.)
4. ID.; ID.; ID.; ID. — The action being quasi in rem, the Court of First Instance
of Manila has jurisdiction to try the same even if it can acquire no jurisdiction over the
person of the non-resident. In order to satisfy the constitutional requirement of due
process, summons has been served upon her by publication. There is no question as to
the adequacy of the publication to the petitioner's last known place of residence in the
United States. But, of course, the action being quasi in rem and notice having been
made by publication, the relief that may be granted by the Philippine court must be
con ned to the res, it having no jurisdiction to render a personal judgment against the
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 nonresident. In the amended complaint led by E. A. P., no money judgment or other
relief in personam is prayed for against the petitioner. The only relief sought therein is
that she be declared to be without any interest in the shares in controversy and that she
be excluded from any claim thereto.

DECISION

MORAN , J : p

On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the

Court of First Instance of Manila against the Benguet Consolidated Mining Company for
dividends amounting to P71,379.90 on 52,874 shares of stock registered in his name,
payment of which was being withheld by the company; and, for the recognition of his
right to the control and disposal of said shares, to the exclusion of all others. To the
complaint, the company led its answer alleging, by way of defense, that the
withholding of such dividends and the non-recognition of plaintiff's right to the disposal
and control of the shares were due to certain demands made with respect to said
shares by the petitioner herein, Idonah Slade Perkins, and by one George H. Engelhard.
The answer prays that the adverse claimants be made parties to the action and served
with notice thereof by publication, and that thereafter all such parties be required to
interplead and settle the rights among themselves. On September 5, 1938, the trial
court ordered respondent Eugene Arthur Perkins to include in his complaint as parties
defendant petitioner, Idonah Slade Perkins, and George H. Engelhard. The complaint
was accordingly amended and in addition to the relief prayed for in the original
complaint,-respondent Perkins prayed that petitioner Idonah Slade Perkins and George
H. Engelhard be adjudged without interest in the shares of stock in question and
excluded from any claim they assert thereon. Thereafter, summons by publication were
served upon the non-resident defendants, Idonah Slade Perkins and George H.
Engelhard, pursuant to the order of the trial court. On December 9, 1938, Engelhard filed
his answer to the amended complaint, and on December 10, 1938, petitioner Idonah
Slade Perkins, through counsel, led her pleading entitled "objection to venue, motion to
quash, and demurrer to jurisdiction" wherein she challenged the jurisdiction of the lower
court over her person. Petitioner's objection, motion and demurrer having been
overruled as well as her motion for reconsideration of the order of denial, she now
brought the present petition for certiorari, praying that the summons by publication
issued against her be declared null and void, and that, with respect to her, respondent
judge be permanently prohibited from taking any action on the case.
The controlling issue here involved is whether or not the Court of First Instance of
Manila has acquired jurisdiction over the person of the present petitioner as a non-
resident defendant, or, notwithstanding the want of such jurisdiction, whether or not
said court may validly try the case. The parties have led lengthy memorandums relying
on numerous authorities, but the principles governing the question are well settled in
this jurisdiction.
Section 398 of our Code of Civil Procedure provides that when a non-resident
defendant is sued in the Philippine courts and it appears, by the complaint or by
a davits, that the action relates to real or personal property within the Philippines in
which said defendant has or claims a lien or interest, actual or contingent, or in which
the relief demanded consists, wholly or in part, in excluding such person from any
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 interest therein, service of summons may be made by publication.
We have fully explained the meaning of this provision in El Banco Español Filipino
vs. Palanca, 37 Phil., 921, wherein we laid down the following rules:
(1) In order that the court may validly try a case, it must have jurisdiction over
the subject-matter and over the persons of the parties. Jurisdiction over the subject-
matter is acquired by concession of the sovereign authority which organizes a court
and determines the nature and extent of its powers in general and thus xes its
jurisdiction with reference to actions which it may entertain and the relief it may grant.
Jurisdiction over the persons of the parties is acquired by their voluntary appearance in
court and their submission to its authority, or by the coercive power of legal process
exerted over their persons.
(2) When the defendant is a non-resident and refuses to appear voluntarily,
the court cannot acquire jurisdiction over his person even if the summons be served by
publication, for he is beyond the reach of judicial process. No tribunal established by
one State can extend its process beyond its territory so as to subject to its decisions
either persons or property located in another State. "There are many expressions in the
American reports from which it might be inferred that the court acquires personal
jurisdiction over the person of the defendant by publication and notice; but such is not
the case. In truth, the proposition that jurisdiction over the person of a non-resident
cannot be acquired by publication and notice was never clearly understood even in the
American courts until after the decision had been rendered by the Supreme Court of the
United States in the leading case of Pennoyer v. Neff (95 U. S., 714; 24 Law. ed., 565). In
the light of that decision, and of other decisions which have subsequently been
rendered in that and other courts, the proposition that jurisdiction over the person
cannot be thus acquired by publication and notice is no longer open to question; and it
is now fully established that a personal judgment upon constructive or substituted
service against a non-resident who does not appear is wholly invalid. This doctrine
applies to all kinds of constructive or substituted process, including service by
publication and personal service outside of the jurisdiction in which the judgment is
rendered; and the only exception seems to be found in the case where the non-resident
defendant has expressly or impliedly consented to the mode of service. (Note to Raher
vs. Raher, 35 L. R. A. [N. S.], 292; see also 5 L. R. A. 585; 35 L. R. A. L. R. S.], 312.)
(3) The general rule, therefore, is that a suit against a non-resident cannot be
entertained by a Philippine court. Where, however, the action is in rem or quasi in rem in
connection with property located in the Philippines, the court acquires jurisdiction over
the res, and its jurisdiction over the person of the non-resident is non-essential. In order
that the court may exercise power over the res, it is not necessary that the court should
take actual custody of the property, potential custody thereof being su cient. There is
potential custody when, from the nature of the action brought, the power of the court
over the property is impliedly recognized by law. "An illustration of what we term
potential jurisdiction over the res, is found in the proceeding to register the title of land
under our system for the registration of land. Here the court, without taking actual
physical control over the property, assumes, at the instance of some person claiming to
be owner, to exercise a jurisdiction in rem over the property and to adjudicate the title in
favor of the petitioner against all the world."
(4) As before stated, in an action in rem or quasi in rem against a non-
resident defendant, jurisdiction over his person is non-essential, and if the law requires
in such case that the summons upon the defendant be served by publication, it is
merely to satisfy the constitutional requirement of due process. If any be said, in this
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 connection, that "many reported cases can be cited in which it is assumed that the
question of the su ciency of publication or notice in a case of this kind is a question
affecting the jurisdiction of the court, and the court is sometimes said to acquire
jurisdiction by virtue of the publication. This phraseology was undoubtedly originally
adopted by the court because of the analogy between service by publication and
personal service of process upon the defendant; and, as has already been suggested,
prior to the decision of Pennoyer v. Neff (supra), the difference between the legal
effects of the two forms of service was obscure. It is accordingly not surprising that
the modes of expression which had already been mounded into legal tradition before
that case was decided have been brought down to the present day. But it is clear that
the legal principle here involved is not affected by the peculiar language in which the
courts have expounded their ideas."
The reason for the rule that Philippine courts cannot acquire jurisdiction over the
person of a non-resident, as laid down by the Supreme Court of the United States in
Pennoyer v. Neff, supra, may be found in a recognized principle of public law to the
effect that "no State can exercise direct jurisdiction and authority over persons or
property without its territory. Story, Con . L., ch. 2; Wheat, Int. L., pt. 2, ch. 2. The several
States are of equal dignity and authority, and the independence of one implies the
exclusion of power from all others. And so it is laid down by jurists, as an elementary
principle, that the laws of one State have no operation outside of its territory, except so
far as is allowed by comity; and that no tribunal established by it can extend its process
beyond that territory so as to subject either persons or property to its decisions. Any
exertion of authority of this sort beyond this limit,' says Story, 'is a mere nullity, and
incapable of binding such persons or property in any other tribunals.' Story, Con . L.,
sec. 539." (Pennoyer v. Neff, 95 U. S., 714; 24 Law. ed., 565, 568-569.)
When, however, the action relates to property located in the Philippines, the
Philippine courts may validly try the case, upon the principle that a "State, through its
tribunals, may subject property situated within its limits owned by non-residents to the
payment of the demand of its own citizens against them; and the exercise of this
jurisdiction in no respect infringes upon the sovereignty of the State where the owners
are domiciled. Every State owes protection to its own citizens; and, when non-residents
deal with them, it is a legitimate and just exercise of authority to hold and appropriate
any property owned by such non-residents to satisfy the claims of its citizens. It is in
virtue of the State's jurisdiction over the property of the non-resident situated within its
limits that its tribunals can inquire into the non-resident's obligations to its own citizens,
and the inquiry can then be carried only to the extent necessary to control the
disposition of the property. If the non-resident has no property in the State, there is
nothing upon which the tribunals can adjudicate." (Pennoyer v. Neff, supra.)
In the instant case, there can be no question that the action brought by Eugene
Arthur Ferkins in his amended complaint against the petitioner, Idonah Slade Perkins,
seeks to exclude her from any interest in a property located in the Philippines. That
property consists in certain shares of stock of the Benguet Consolidated Mining
Company, a sociedad anonima, organized in the Philippines under the provisions of the
Spanish Code of Commerce, with its principal o ce in the City of Manila and which
conducts its mining activities therein. The situs of the shares is in the jurisdiction where
the corporation is created, whether the certi cates evidencing the ownership of those
shares are within or without that jurisdiction. (Fletcher Cyclopedia Corporations,
Permanent ed., Vol. 11, p. 95). Under these circumstances, we hold that the action thus
brought is quasi in rem, for, while the judgment that may be rendered therein is not
strictly a judgment in rem, "it xes and settles the title to the property in controversy
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 and to that extent partakes of the nature of the judgment in rem." (50 C. J., p. 503). As
held by the Supreme Court of the United States in Pennoyer v. Neff (supra):
"It is true that, in a strict sense, a proceeding in rem is one taken directly
against property, and has for its object the disposition of the property, without
reference to the title of individual claimants; but, in a larger and more general
senses the terms are applied to actions between parties, where the direct object is
to reach and dispose of property owned by them, or of some interest therein."
The action being quasi in rem, the Court of First Instance of Manila has
jurisdiction to try the same even if it can acquire no jurisdiction over the person of the
non-resident. In order to satisfy the constitutional requirement of due process,
summons has been served upon her by publication. There is no question as to the
adequacy of the publication made nor as to the mailing of the order of publication to
the petitioner's last known place of residence in the United States. But, of course, the
action being quasi in rem and notice having been made by publication, the relief that
may be granted by the Philippine court must be con ned to the res, it having no
jurisdiction to render a personal judgment against the non-resident. In the amended
complaint led by Eugene Arthur Perkins, no money judgment or other relief in
personam is prayed for against the petitioner. The only relief sought therein is that she
be declared to be without any interest in the shares in controversy and that she be
excluded from any claim thereto.
Petitioner contends that the proceeding instituted against her is one of
interpleading and is therefore an action in personam. Section 120 of our Code of Civil
Procedure provides that whenever con icting claims are or may he made upon a
person for or relating to personal property, or the performance of an obligation or any
portion thereof, so that he may be made subject to several actions by different persons,
such person may bring an action against the con icting claimants, disclaiming personal
interest in the controversy, and the court may order them to interplead with one another
and litigate their several claims among themselves, and thereupon proceed to
determine their several claims. Here, the Benguet Consolidated Mining Company, in its
answer to the complaint led by Eugene Arthur Perkins, averred that in connection with
the shares of stock in question, con icting claims were being made upon it by said
plaintiff, Eugene Arthur Perkins, his wife Idonah Slade Perkins, and one named George
H. Engelhard, and prayed that these last two be made parties to the action and served
with summons by publication, so that the three claimants may litigate their con icting
claims and settle their rights among themselves. The court has not issued an order
compelling the con icting claimants to interplead with one another and litigate their
several claims among themselves, but instead ordered the plaintiff to amend his
complaint including the other two claimants as parties defendant. The plaintiff did so,
praying that the new defendants thus joined be excluded from any interest in the shares
in question, and it is upon this amended complaint that the court ordered the service of
the summons by publication. It is, therefore, clear that the publication of the summons
was ordered not in virtue of an interpleading, but upon the ling of the amended
complaint wherein an action quasi in rem is alleged.
Had not the complaint been amended, including the herein petitioner as an
additional defendant, and had the court, upon the ling of the answer of the Benguet
Consolidated Mining Company, issued an order under section 120 of the Code of Civil
Procedure, calling the con icting claimants into court and compelling them to
interplead with one another, such order could not perhaps have validly been served by
publication or otherwise, upon the non-resident Idonah Slade Perkins, for then the
proceeding would be purely one of interpleading. Such proceeding is a personal action,
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 for it merely seeks to call con icting claimants into court so that they may interplead
and litigate their several claims among themselves, and no speci c relief is prayed for
against them, as the interpleader simply disclaims any personal interest in the
controversy. What would be the situation if, after the claimants have appeared in court,
one of them pleads ownership of the personal property located in the Philippines and
seeks to exclude a non-resident claimant from any interest therein, is a question which
we do not decide now. Su ce it to say that here the service of the summons by
publication was ordered by the lower court by virtue of an action quasi in rem against
the non-resident defendant.
Respondents contend that, as the petitioner in the lower court has pleaded res
adjudicata, lis pendens and lack of jurisdiction over the subject-matter, she has
submitted herself to its jurisdiction. We have noticed, however, that these pleas have
been made not as independent grounds for relief, but merely as additional arguments in
support of her contention that the lower court had no jurisdiction over her person. In
other words, she claimed that the lower court had no jurisdiction over her person not
only because she is a non-resident, but also because the court had no jurisdiction over
the subject-matter of the action and that the issues therein involved have already been
decided by the New York court and are being relitigated in the California court. Although
this argument is obviously erroneous, as neither jurisdiction over the subject-matter nor
res adjudicata nor lis pendens has anything to do with the question of jurisdiction over
her person, we believe and so hold that the petitioner has not, by such erroneous
argument, submitted herself to the jurisdiction of the court. Voluntary appearance
cannot be implied from either a mistaken or super uous reasoning but from the nature
of the relief prayed for.
For all of the foregoing, petition is hereby denied, with costs against petitioner.
Avanceña, C.J., Villa-Real, Imperial, Diaz and Concepcion, JJ., concur.

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